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Rio Tinto Bets on Unproven Lithium Tech in Chile Amid Price Slump

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Global mining giant Rio Tinto is entering Chile’s lithium sector with two major projects—Maricunga and Altoandinos—in partnership with state-run miners Codelco and ENAMI, respectively. The move marks a significant shift for Chile, which has long relied on just two lithium producers: SQM and Albemarle.

Rio will lead operations at both sites, holding nearly 50% of Maricunga and 51% of Altoandinos, signaling its boldest step yet into the battery metal market. However, the strategy hinges on the deployment of direct lithium extraction (DLE)—a promising but yet unproven technology at commercial scale in Chile.

Why It Matters

  • DLE technology is more environmentally friendly than traditional brine evaporation, but has never been commercialized in Chile and still poses significant operational risks.

  • The move comes amid a 90% drop in lithium prices since late 2022, as global EV demand softens and oversupply persists.

  • Rio’s dual-deal entry follows its recent acquisition of Arcadium Lithium and a DLE pilot in Argentina, giving it a perceived edge over rival bidders.

Project Details

  • Maricunga Project (with Codelco):

    • Expected $900 million investment by Rio.

    • Construction to start in 3–5 years, pending environmental approvals.

    • Rio will lead all phases—design, build, operation, sales—and begin with DLE from day one.

    • A technical committee led by Rio will manage development until production, after which control shifts to a 50-50 split.

  • Altoandinos Project (with ENAMI):

    • Rio will invest $425 million initially to fund feasibility studies.

    • Partners were chosen through an independent selection process that included BYD, Eramet, Posco, and financial bidders like LG Energy and CNGR.

Market and Investment Climate

  • The entry into Chile comes as CEO Jakob Stausholm prepares to depart. Stausholm had championed Rio’s lithium expansion strategy.

  • Despite Rio’s growing stake, analysts remain cautious. RBC Capital Markets noted:

    “We have not heard from investors that they want to see further investment in lithium.”

  • Benchmark Minerals warned of Rio and Codelco overextending:

    “Too many fronts open… when justifying large investments in lithium is challenging.”

Strategic Considerations

  • Codelco will retain national oversight but allow Rio to lead on technical decisions early on.

  • DLE implementation will be closely scrutinized for scalability, efficiency, and sustainability.

  • Rio may receive an intellectual property permit in Chile if its DLE proves viable.

Outlook

Despite volatile prices and technical risk, Rio’s high-profile push in Chile signals a long-term bet on the future demand for lithium and its role in EV and energy storage markets. Its success will hinge on DLE performance and a rebound in lithium economics.

CATL Resumes Lithium Mining and Refining Operations in Jiangxi Province

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Chinese battery giant CATL (300750.SZ) has resumed operations at its lithium lepidolite mine and refinery in Jiangxi province, according to a spokesperson from its joint venture partner Lopal Tech (603906.SS). This restart is attributed to CATL’s success in reducing production costs at both facilities.

Currently, the operation is producing over 2,000 tons of lithium carbonate per month, with plans to ramp up production to more than 3,000 tons per month as the operation progresses.

Reports emerged last week from UBS, confirming that the mine had resumed production. However, CATL did not respond to Reuters’ request for comment.

CATL’s mine in Jiangxi has been a key contributor to China’s rapidly expanding lithium supplies, which are essential for the production of batteries. The news of its closure in September had previously caused a surge in lithium stocks. The resumption of the mine has had an immediate impact on the market, as lithium miner shares in Australia experienced a drop on Tuesday.

In response to the news, the most-traded November lithium carbonate futures contract on the Guangzhou Futures Exchange closed at 77,300 yuan ($10,578) per metric ton, reflecting a 1.6% drop from the previous day. CATL’s share price on the Shenzhen Stock Exchange also saw a decline of 2.6%, closing at 251.8 yuan.